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DMCA dealt serious blow by Sixth Circuit Appeals Court

Today the US Court of Appeals for the Sixth Circuit issued a powerful ruling …

The DMCA has been used in many egregious ways, one of which we first reported in early 2003 when Lexmark attempted to use the DMCA's anti-circumvention provisions to eliminate competition in the aftermarket toner industry. As you may know, third party companies routinely reverse engineer toner cartridge designs for printers made by the likes of Lexmark, HP, and Brother (just to name a few). By doing so, they keep the market competitive, and they keep the printer companies from utterly gouging consumers for toner.

Lexmark sought to put an end to this by incorporating on-chip technology that checks for the validity of the toner cartridge (read: if it's made by Lexmark), and refuse to use anything else. Static Control Components (SCC hereafter) called Lexmark's bluff, and reverse engineered the chip so that their generic toner products could still be used with Lexmark printers. Lexmark responded by filing suit, using the DMCA as an attack dog. Lexmark was granted an injunction in March of 2003, but by late October, the courts ruled against them. Lexmark vowed to appeal, and here we are today.

In a word, the appeal failed. The US Court of Appeals for the Sixth Circuit ruled against Lexmark (decision here), and offered future guidance relating to the use of the DMCA. As you may recall, the DMCA is all about copyright, and it was Lexmark's (necessary) argument that their copyright was infringed upon by SCC when they reverse engineered the chip. The court, however, sided with the view that access controls are not typically eligible for copyright protection.

Generally speaking, "lock-out" codes fall on the functional-idea rather than the original-expression side of the copyright line. Manufacturers of interoperable devices such as computers and software, game consoles and video games, printers and toner cartridges, or automobiles and replacement parts may employ a security system to bar the use of unauthorized components. To "unlock" and permit operation of the primary device (i.e., the computer, the game console, the printer, the car), the component must contain either a certain code sequence or be able to respond appropriately to an authentication process. To the extent compatibility requires that a particular code sequence be included in the component device to permit its use, the merger and sc?nes ? faire doctrines generally preclude the code sequence from obtaining copyright.

In other words, Lexmark's protections are not afforded copyright protection. Furthermore, the access-based argument was seen as invalid by the court, which itself stated strongly that access to the printer is the result of a consumer purchasing the printer, not any given technology. SCC's reverse engineering was not a circumvention of the Toner Loader Program, but a legal replacement of it. As such, the court said, even if Lexmark's efforts were given copyright protection, SCC's actions would still have constituted Fair Usea double blow to those seeking to use the DMCA to stifle competition. At the end of the decision, the Merritt wrote at length concerning the questionable nature of using the DMCA to protect or invent monopolies, and it's worth quoting that concurring opinion (while noting that it is technically not part of the ruling).

We should make clear that in the future companies like Lexmark cannot use the DMCA in conjunction with copyright law to create monopolies of manufactured goods for themselves just by tweaking the facts of this case: by, for example, creating a Toner Loading Program that is more complex and ?creative? than the one here, or by cutting off other access to the Printer Engine Program. The crucial point is that the DMCA forbids anyone from trafficking in any technology that ?is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a [protected] work.? 17 U.S.C. ? 1201(2)(A) (emphasis added). The key question is the ?purpose? of the circumvention technology. The microchip in SCC?s toner cartridges is intended not to reap any benefit from the Toner Loading Program ? SCC?s microchip is not designed to measure toner levels ? but only for the purpose of making SCC?s competing toner cartridges work with printers manufactured by Lexmark. [...]

Reading the DMCA in pari materia with the rest of the copyright code supports this interpretation. The DMCA should be used as part of the copyright code as it applies to computer software codes and other digital media. To this extent, the specific ?purpose? language of the DMCA modifies the more abstract language of the previous copyright law. As the Court explains, the fair use exception in copyright law explicitly looks to the purpose of the one making the copy in determining whether or not such copying violates the statute, and the DMCA itself contains a reverse engineering exception that also demonstrates Congress?s aim merely to prevent piracy. I agree with the Court that both exceptions apply to SCC?s actions in this case. But we should be wary of shifting the burden to a rival manufacturer to demonstrate that its conduct falls under such an exception in cases where there is no indication that it has any intention of No. 03-5400 Lexmark Int?l v. Static Control Components Page 22 pirating a protected work. See, e.g., Lawrence Lessig, Free Culture 187 (2004) (noting the danger that ?in America fair use simply means the right to hire a lawyer to defend your right to create?).

A monopolist could enforce its will against a smaller rival simply because the potential cost of extended litigation and discovery where the burden of proof shifts to the defendant is itself a deterrent to innovation and competition. Misreading the statute to shift the burden in this way could allow powerful manufacturers in practice to create monopolies where they are not in principle supported by law. Instead, a better reading of the statute is that it requires plaintiffs as part of their burden of pleading and persuasion to show a purpose to pirate on the part of defendants. Only then need the defendants invoke the statutory exceptions, such as the reverse engineering exception. In this case, even if the Toner Loading Program were protected by copyright, and even if the access to the Printer Engine Program were ?effectively? controlled, there has been no showing that SCC circumvented the authentication sequence for the purpose of accessing these programs. Indeed, the proof so far shows that SCC had no interest in those programs other than ensuring that their own cartridges would work with Lexmark?s printers.

This is a strong warning to those who might have similar designs on using the DMCA for unfair competition, and the wild speculator in me wonders if this doesn't open the door, in part, to circumvention techniques such as that used by Real to get around FairPlay. Time will tell, but today marks a victory for the little guys.

Ken Fisher
Ken is the founder & Editor-in-Chief of Ars Technica. A veteran of the IT industry and a scholar of antiquity, Ken studies the emergence of intellectual property regimes and their effects on culture and innovation. Emailken@arstechnica.com//Twitter@kenfisher